Best Negotiation Tactics For Home Buyers in a Seller’s Market

Lately it seems the great listings are commanding multiple offers, and selling quickly. For buyers who have been searching the market for some time this can be frustrating, as a good looking listing can often sell at a higher price and the buyer is forced to compete with many others, some who may be better qualified on paper. So what is a buyer to do?

Here are some great negotiation tactics that might help your offer be accepted:

1.  Offer the best price you can. By this I do not mean the “highest” price. The best price, in comparison, means the one that will appraise and that you feel comfortable paying. If the home is the highest priced home in the neighborhood, you need to weigh the possibilities – for example, is it probable that other homes will improve in the near future? In order to really understand the value of a particular neighborhood you need to consult with an experienced real estate agent.

But, you say, what about the other buyers, who may be willing to pay more? If a seller is only after a number than there is a chance that such a buyer may outbid you. However, keep in mind that unless that buyer is paying cash there is a chance the home will not appraise at the contracted price. That is why is is important to make a strong offer in other respects. Even if your offer is not accepted there is a chance they may come back to you if the current contract does not close.

2. Shorten up time frames. Sellers want to know as soon as possible that the sale has a high chance of closing. In California, the buyer has 17 days to investigate and remove all contingencies but the loan; the loan contingency is 21 days. I would not suggest shortening the loan contingency unless your lender says that will be absolutely possible (however, with the new lender disclosure laws it may be impossible, so speak with your agent and lender first); removing the inspection contingency in a shorter time frame can be possible, so it is something to consider. You can also let the seller know that if your loan gets approved in fewer than 21 days you are happy to remove that contingency earlier.

3. Should you write a letter to the sellers? This is a controversial topic and really is one that needs to be decided with your agent. It used to be that buyers who wrote a great “here’s who we are!” letter had a higher chance of getting an offer accepted (assuming all other aspects were equally promising), because it made the buyers real people and played on seller emotions.

4. Multiple counter offer situations: If you receive a multiple counter offer you have to be prepared to accept the terms or put your best final offer forward. Again, it is not always about just price, so have your agent find out exactly what the seller is hoping for. If the seller is selling an investment property they likely are focused on numbers; if the sellers have lived in the home for some time there may be emotions involved, in which case you can alter your response.

Today there is controversy about such letters because many say if an offer is not accepted there is a chance it could be due to prejudice – without going into a long list here you can imagine the possibilities. Regardless, this is a decision you need to make with your agent. It really depends on the situation but I still believe there are ways to write these letters to cater them more to the home and less personal.

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It is important to remember that every market and each home sale may be different and present a different set of circumstances. It is important to speak with your real estate agent and lender and find out specifically what you can do to provide the best opportunity to have your offer accepted.